MUMBAI: Dusting off its old playbook, Bank of India’s (BoI) new MD & CEO, Dinabandhu Mohaptra, has chalked out a 5-pronged strategy to reposition the bank’s road to profitability.
First in line is to rebalance the credit portfolio by lending more to ordinary folk rather than the industry. BoI’s retail portfolio already grew at a healthy 10.63 per cent during FY17. But Mohaptra, who took over the reins a few weeks ago following the government’s surprise top-level management shuffle at seven public sector banks, wants it to grow further at 17-18 per cent this fiscal. Currently, retail portfolio comprises 51 per cent of all advances and BoI wants this to increase to 52 per cent.
“We are working towards a turnaround in the quickest of time including efficient NPA management and rebalancing our portfolio. We hope to deliver better than expected,” he told media.
During 2016-17, it has seen a raft of write-downs as it cleaned up the balance sheet resulting in a net loss of Rs 1,558 crore, lower than Rs 6,089 crore registered a year ago. Owing to lower provisions, BoI’s Q4 net loss too narrowed to Rs 1,045.54 crore against Rs 3,587.11 crore a year ago. But markets reacted sharply, shares tumbling over 11 per cent following the announcement.
Mohapatra, on his part, is determined on the way forward. “We are taking a two-way approach to deal with NPAs: Big and mid and small-size loans. We are going all ways,” he said without disclosing specifics.
Gross NPAs stood at 13.07 percent, while net NPAs reduced to 6.90 per cent of net advances at during FY17, as against 7.79 per cent a year earlier.
The bank’s gross and net asset quality remained stable, but saw fresh slippages and write offs. While slippages in the fourth quarter came in close to Rs 7,000 crore, it wrote-off Rs 3,983 crore during the fourth quarter. Provisions grew 76 per cent on a sequential basis to Rs 4,483.53 crore from Rs 2,546.2 crore. Provision coverage ratio for the bank stood at 61.47 percent. Consequently, the RBI allowed the bank to make a payment of Additional Tier-I bonds by debiting its revenue reserve.